SGD/AUD Outlook:
The SGD/AUD exchange rate is likely to decrease as it is currently below its 90-day average and near recent lows, pressured by economic factors in Singapore and Australia.
Key drivers:
- Rate gap: The Reserve Bank of Australia has recently raised interest rates, while Singapore's monetary authority adopted a more accommodative stance, widening the rate differential.
- Risk/commodities: The AUD's recent gains have been supported by rising commodity prices, especially in gold, benefitting Australia's economy.
- One macro factor: Sticky inflation in Australia raises the likelihood of further rate hikes, strengthening the AUD against the SGD.
Range:
Expect the SGD/AUD to drift within its recent range, potentially testing the lower end near the recent 3-month low.
What could change it:
- Upside risk: A stronger showing in Australia’s economic data could add strength to the AUD.
- Downside risk: A worsening of Singapore’s trade relations or economic indicators could weaken the SGD further.
